DoorDash delivers a virtual convenience store

Discussion
Sources: DoorDash
Aug 07, 2020
Al McClain

Many of us are used to having takeout meals and groceries delivered by a variety of services. Now, DoorDash, a food delivery service with an approximate 45 percent market share, according to Second Measure, is launching DashMart, a new service offering 2,000 grocery products and essentials, as well as convenience and restaurant branded items delivered within 30 minutes.

The service is already available in eight U.S. cities with plans for more to come online soon. The virtual stores are really micro fulfillment centers where DashMart employees pick and pack orders that are delivered by other workers called “Dashers,” according to TechCrunch. This launch comes after DoorDash worked with convenience and drug store chains such as 7-Eleven, Wawa, CVS, and Walgreens to deliver key items quickly to shoppers during the pandemic.

The new service offers items such as dog food, cough medicine and ice cream, which one might want in a hurry. But DashMart also offers a variety of restaurant-branded items, such as sauces and rubs, and is pitching the service as a way to get niche retail products from local businesses and restaurants to shoppers.

With supermarkets and grocery delivery services typically offering delivery of a wide assortment of items within two hours and restaurant delivery service often offered within 30 minutes, DoorDash is promising faster delivery of convenience items to consumers along with a way for local merchants and restaurants to reach shoppers with their one-of-a-kind products.

DISCUSSION QUESTIONS: Will DashMart’s offering of essential and unique products delivered in about 30 minutes be a hit with housebound consumers? Do you expect more delivery fulfillment companies to get into the virtual store business and how might that affect their relationship with chain retailers?

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Braintrust
"I think this is a great idea but would be very concerned about the direct conflict of interest with their current convenience and grocery customers."

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12 Comments on "DoorDash delivers a virtual convenience store"


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Richard Hernandez
BrainTrust

I guess it will depend on the retail price of the item and cost to deliver it. This is a natural extension of the service they are providing to their customer base. It will be interesting to see how this plays out on a larger scale.

David Weinand
BrainTrust

I think this is a great idea but would be very concerned about the direct conflict of interest with their current convenience and grocery customers. Competing with the very companies that got them where they are could end up blowing up in their face unless they’ve deemed the potential revenue of this service to far exceed the fees they get from their current customers.

Ben Ball
BrainTrust

Whether third-party delivery companies would try to disintermediate retailers from shoppers has been a long running discussion. The risk has now become the reality. If the DoorDash app opens to DashMart first (and I can’t imagine it won’t) then brand loyal consumers and retailers will both become disenchanted with DoorDash services. DoorDash may be reading the COVID-19 surge in demand too aggressively, thinking consumers are so enamored with their delivery that they won’t switch services or stop using them altogether if it becomes too hard to find Mrs. Dash seasoning instead of DashMart seasoning.

Bob Phibbs
BrainTrust

Great analogy Ben! #seasoning

Richard J. George, Ph.D.
BrainTrust

This is a terrific idea whose timing is right. COVID-19 hastened and expanded online purchases. DashMart’s 2,000 grocery products and essentials, provide convenience store accessibility without leaving your home. As c-stores have evolved into having a more foodservice-oriented focus, many of the items featured by DashMart are no longer to be found on the shelves of many convenience stores. Plus, unlike full-service online supermarket offerings with fresh produce, meats, etc., these packaged products have recognized brand names with little need for pre-inspection or trusting of someone to pick the best fruits and vegetables.

This model will be emulated by others and chain retailers will either need to adjust to DoorDash or develop their own delivery services, something which is complicated and expensive.

Xavier Lederer
BrainTrust

Some convenience and drug store chains have been slow at developing delivery services. This initiative can therefore be seen as a real-world test for them and an interim solution before they develop their own home-delivery offering — either by developing their own network of delivery drivers or by simply leveraging the myriad of delivery services that have popped up over the last few years (or a combination of both).

Georganne Bender
BrainTrust

Thirty-minute delivery of convenience items is a good idea; it would have been a better idea a few months ago when the majority of people were housebound.

If you live in a city and can’t get to a store quickly or if your child is ill and you need Tylenol fast, it’s perfect. But for most of us it’s just as easy to grab our masks and head to a local store. If you don’t want to get out of your car Panera sells grocery basics and Walgreens and CVS offer the same drive-thru service. You still have to leave your house but it’s cheaper than delivery service.

Michael La Kier
BrainTrust

It’s interesting that the news of DashMart’s offering came at roughly the same time that Uber announced earnings and the impact of Uber Eats. Uber Eats bookings were up 113 percent last quarter, pushing revenue to $1.2 billion. While it’s the first quarter the food delivery unit surpassed its ride-hailing business. Yet the company still had net losses of $1.8 billion. This goes to show the rapid delivery business is tough and maybe unprofitable. It’s going to be even harder to make money off Pepsi, Ho Hos, and beef jerky.

Steve Montgomery
BrainTrust

DoorDash is using what I call the Amazon strategy. Work with a company to learn about their business, products, sales tactics and customers and then use that to go into competition with them. Don’t expect that this will help them in their existing relationships with the chain retailers and definitely not with recruiting new ones.

Patricia Vekich Waldron
Staff

A bold move by DoorDash to disintermediate retailers, as other third parties have (tried) to do. I think it may work as an add-on to and existing order, but not as a longer-term standalone site.

Ananda Chakravarty
BrainTrust

The whole premise of DoorDash is to deliver food quickly. Pre-buying common items eliminates delay and also makes the process safer for dashers as they can purchase in bulk. With more data, DoorDash can even find ways to capture the lowest price points. How can faster delivery (and more convenience) be anything but a hit with customers. Chain retailers will have a bit of concern in that they are undermining the business, but when all is said and done, the chain retailers are still selling product without having to build an entire infrastructure to support delivery. Expect to see copycats when this model takes off.

Casey Craig
BrainTrust

Businesses that learn to adapt through virtual platforms will do well during COVID and beyond. The pandemic has quickened the pace in which companies are moving to digital platforms, and as such, customers have begun to expect and rely on BOPIS and quick delivery options. The food and restaurant industry initially led the shift to on-demand delivery during COVID, but now all retail sectors are beginning to follow suit. Consumers expect convenience, quality, and speed. Retailers will have to have seamless digital products to accomplish these goals.

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"I think this is a great idea but would be very concerned about the direct conflict of interest with their current convenience and grocery customers."

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